Bitcoin as an Alternative Financial Asset Class: Relations Between Geopolitical Risk, Global Economic Political Uncertainty, and Energy Consumption

Abstract

The aim of this research is to investigate the causality between Global Economic Political Uncertainty (GEPU) and Geopolitical Risk (GPRT) and Bitcoin Energy Consumption (BTCE). In order to test the stationarity of the variables, the Lee-Strazich unit root test, which takes into account the structural breaks, was used, and the causality relationship between the variables was analyzed with the Hatemi-J (2012) causality test. Monthly data between May 2011 and February 2022 were used in the research. According to the results obtained from the research, geopolitical risk and global economic policy uncertainity are effective on bitcoin energy consumption. In addition, it has been determined that the negative effects of geopolitical risk and global uncertainties are more dominant. The results show that the demand for bitcoin, which is considered an alternative financial asset class, and accordingly bitcoin energy consumption, increases in case of global risks and economic uncertainties.